Lock-in Period
Definition
The minimum duration for which an investment must be held before it can be redeemed. ELSS: 3 years. PPF: 15 years (partial withdrawal from year 7). Tax-saver FD: 5 years. NPS: till age 60. No lock-in for regular mutual funds.
Why is Lock-in Period Important?
In the context of wealth creation and investing in India, Lock-in Period is a fundamental concept. Whether you are investing in mutual funds via SIPs, fixed deposits, or retirement schemes like PPF and NPS, this metric helps evaluate potential returns and risks. The power of compounding and market volatility make it essential to track this indicator for any long-term portfolio.
Investors are encouraged to use specific investment calculators to project the future value of their corpus. Understanding this term enables better asset allocation, inflation protection, and consistent progress toward your ultimate financial goals.
What is Lock-in Period?
A lock-in period is the minimum duration for which an investment must be held before you can redeem or withdraw it. During this period, partial or full withdrawal is either prohibited or attracts penalties.
Lock-in Periods for Common Investments
| Investment | Lock-in Period |
|---|---|
| ELSS Mutual Funds | 3 years |
| Tax-Saving FD | 5 years |
| PPF | 15 years (partial withdrawal after 7 years) |
| NPS Tier I | Until age 60 |
| NSC | 5 years |
| Sukanya Samriddhi | Until girl child turns 21 |
| Regular Mutual Funds | None (exit load may apply) |